What People Don't Understand About Food Replacement Startup Soylent, According To A VC Who Led A $20M Investment

Soylent, a startup that offers a powder mixture that can act as a replacement for food, got a $20 million investment from top venture-capital firms Andreessen Horowitz, Lerer Ventures, and Index Ventures.

Chris Dixon, who works at Andreessen Horowitz, wrote a blog post explaining the firm's investment in Soylent.

Dixon thinks people are missing the big picture when it comes to the product. He was struck by the community Soylent has built around its product, comparing it to GoPro's.

"Many investors decided not to invest in GoPro because they saw it as a camera company, and camera companies generally get quickly commoditized," Dixon writes. "However, investors who properly understood GoPro saw it primarily as a highly engaged community of sports enthusiasts, something that is very hard for competitors to replicate."

Dixon believes the community Soylent has built around its product is irreplaceable and that "this community of people who are enthusiastic about using science to improve food" makes the company "an obvious investment."

"If you look at Soylent as just a food company, you misjudge the core of the company, the same way you would if you looked at GoPro as just a camera company," Dixon says.

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Though Soylent only makes money by selling its food product, the brand also hosts an active discussion forum and a do-it-yourself Soylent site where users share their own Soylent recipes.

A Soylent kit comes with powder, an oil blend, and a jar to shake the mixture in.
Dylan Love

The company has grown exponentially since its 2013 seed round and currently generates millions of dollars per month in subscription revenues.

Here's how Soylent works: You can subscribe for $70 per month, and you get seven bags of Soylent, which should last you a month. They will make 21 meals. Or you can buy seven bags for a one-time fee of $85. Here's the full pricing structure:

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Soylent is currently profitable, so it will use its additional fund to invest in long-term research and development.

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According to Dixon, the food industry is ripe for disruption. He explains that for too long the industry and research surrounding nutrition have been dominated by self-interested traditional food companies that have left consumers confused, sick, and unhappy.

"Soylent inverts the Big Food business model, spending nothing on advertising and distributing solely through e-commerce," he says. "Soylent's 'marketing plan' is to invest in its online community and in peer-reviewed scientific studies."

Along with improving its current product, Soylent plans to introduce several new products and dramatically reduce the price of Soylent from the current $3 per meal to a fraction of that.